How does health insurance work?

Health insurance helps pay for the cost of medical care by reducing the amount you personally pay when you have medical needs. The amount you pay depends on your specific health insurance plan. Plans vary by how much they cost each month, how much they cover and where you can go for care.

 

As part of the ACA, all insurance plans are required to cover these 10 services:

  1. Ambulatory patient services (outpatient services)
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care

 

Health insurance terms to know:

Co-insurance

The percentage of a health care bill you have to pay. This starts after you have met your deductible. 

 

 

EXAMPLE:

You have a plan with 20% co-insurance, so you pay 20% of a covered healthcare service and your insurance will pay the remaining 80%.

  • $10,000 (broken leg) -$8,000 (80% coinsurance) =  $2000 you pay

 

Copayment (aka Co-pay)

A set amount you have to pay for a health care service. You pay just to get in, like a movie ticket.  

EXAMPLE:

  • Doctor visit = $10
  • ER visit = $300
  • Urgent care visit = $75
  • Prescription = $5

 

Deductible

The amount you have to spend on health care bills before your health insurance begins to pay.

EXAMPLE:

Before deductible - You haven’t had any medical bills this year and you go to the doctor. You have NOT met your deductible. 

  • $100 visit - $0 (no coinsurance) = you pay $100

After deductible - You get sick and spend $1500 in medical bills. Your yearly deductible is $1500, so you have met your deductible. You go to the doctor again.

  • $100 visit - $80 (80% coinsurance) = you pay $20

 

In-network provider

Hospitals and doctors your health insurer has a contract with. You will pay less to go here and some insurance won’t cover services outside your network. Make sure to check with your provider because networks can change!

 

 

EXAMPLE:

You go to a doctor who is in-network. Your plan’s normal coverage rates apply to the bill: $10 copay and 20% coinsurance for any covered services during the visit.

  • $10 copay + $20 lab work (after coinsurance and billed later) = $30 total visit

 

Out of pocket max

The most you have to pay in health care costs for one year. If you reach this amount, your plan pays 100% as long as it’s a service covered by your plan.

  • Includes: deductible, coinsurance, copayments
  • Doesn’t include: monthly premiums or services not covered by your plan.

EXAMPLE:

You keep getting sick during the year and spend $3,500 in medical bills. Your out-of-pocket maximum is $3,500 so you reached your out-of-pocket maximum. Later in the year, you break your leg.

$10,000 (broken leg) – $10,000 (100% coinsurance) =  $0 you pay

 

Premium

The amount you pay every month just to have health insurance - like car insurance or your monthly cell phone bill.

Does not include medical bills, copays and does not add into your yearly deductible

 

EXAMPLE:

Every month you pay Coventry $100 to have health insurance.

  • If you stop paying your monthly premium, your insurance will be canceled and you will be responsible for 100% of your medical bills. Plus, you may have to pay a fine when you file taxes for that year.